About 6 months ago, I looked at myself in the mirror and decided enough was enough. The past 4 years had been successful: my wife and I had watched our two baby daughters blossom into beautiful personalities of their own, and my business ventures were going well. But looking in the mirror, I realised that it had come at the cost of my physical health. I looked terrible, and felt even worse.
The next day I walked into the gym, signed up for 6 months with a Personal Trainer, and started the slow road back to fitness. The first few days were awful, the next week a bit less awful, and after a few weeks, I was actually enjoying it. After a couple of months, I was feeling much healthier, but showed almost zero visible progress when I looked in the mirror. A poor return on my investment, I thought.
A month later – wow! I could see a noticeable difference in myself: how I looked, how my clothes fit, and how I felt physically and mentally. I had more energy at the gym, more energy for my kids, and crucially for an entrepreneur, more energy for work.
Almost all of the benefits of those initial 3 months came in the last 12 weeks. And since then, the results have only got better and better with each month.
It’s not a unique story – anybody who has stuck with an exercise plan will no doubt have experienced something similar – but it’s a great illustration of something that we all should be striving to master and benefit from:
The Compound Effect.
Mention ‘compounding’ to friends and their first thoughts will all likely be the same: money, compound interest, saving etc. If they are savvy enough, they will tell you about the upward curve on a compound interest chart.
What most people don’t understand is that you can apply the concept of compounding, and its effects, to almost anything in life. In fact, I would say it is crucial to your success in life and happiness as a person. Almost everyone is already applying the compound effect to some area of their life, whether they are conscious of it or not. Whether it is painting, running, writing, running a business, studying, investing, or anything at all – we get increasingly better the more we work at it.
The problem is that the thing the compound effect relies upon also happens to be our own worst enemy: habits.
Long-term habits are so hard to build because they take time. It takes on average 66 days to form a new habit. That’s over 2 months of daily dedication to something, and as I mentioned in my own example, they are usually the days where there are no tangible results. Think of all the failed hobbies and exercise regimes, the business ideas that never saw the light of day – all great ideas, sometimes even passions, that fall victim to our inability to build habits.
It’s especially true in business. I’m a firm believer that everybody has a business idea in them. Even if they won’t say it out loud, every employee has had dreams of how they could take their skills and turn it into a business. Entrepreneurs can have dozens of ideas a year. The issue is that it takes so long for the compound effect to show results, people give up early – or even worse, never start.
This is compounded by what we see from the outside looking in on successful businesses. Often, they’ll spring up out of nowhere into public consciousness, success appearing to happen over a short period of time.
You can bet your house that this isn’t the case – somebody, somewhere, dreamt up that business idea, and started taking small steps in order to make it happen. Maybe it was 10 minutes a day, maybe it was their Saturdays, or even their whole weekend, dedicated to something that had very minimal immediate returns, as well as the real possibility of failure. The eventual success was a product of the compound effect – the consistent effort and mastery that eventually explodes into results.
At the centre of the Venn diagram made up of the compound effect and habits is: consistency. Consistency really is the key to all long-term results, and the more consistent you can be, the more your results will compound. Ask anybody near retirement who has paid consistently into their pension – it doesn’t take huge payments to create a large retirement fund. Any successful bloggers will tell you that their first couple of years were filled with aimless writing and low traffic while they figured out how to monetize their writing. Warren Buffet famously has generated over 99% of his wealth since the age of 52. Buffet is an astute investor, but he’s also benefited from the compound effect of learning, spending 80% of his time reading and studying, quoted as saying:
“That’s how knowledge works. It builds up, like compound interest.”
It’s easy to connect the dots: master the art of consistency, and you’ll reap the rewards of the compound effect by the bucketload over time.
The difficult part is getting past the 66-day mark and forming a habit. The good news is that the best way to begin is to approach every part of your life with the compound effect in mind. Here’s some tips to get you started:
- Track your behaviour. Use whatever tool you need, iCal, pen and paper, Google Sheets, an online tracker. Whatever you use, track your time, your spending, your productivity.
- Find gaps and make yourself accountable for filling them with actions you want to become habits.
- Once you are tracking your behaviour, measure it. You cannot improve on something until you can measure it.
- Get up an hour earlier than you are used to. The silent hours before the rest of your household is awake is the best time to begin building new habits – no noise, no distractions, just time to dedicate to your future. Trust me, before long you will be skipping TV, going to bed 3 hours earlier and getting up 3 hours earlier than you ever did!
- Exercise daily. This is not just about physical health – this is about putting routine and consistency into your day, and also affording yourself the time and space necessary away from the daily grind.
- Read for at least 30 minutes each day. Set time in your diary and do not let anything get in the way. You can read anything, but think about what you are trying to see a compound effect in down the road, and study hard. 30 minutes will feel difficult for the first few weeks; after that it will feel like a warm up.
- Ask yourself every day: have I learned something that will benefit me in the future?
- Be conscious of small choices you make. Most often, these are the ones that we sleep-walk through, but can have big compounding consequences down the road.
- Reward yourself for daily improvements, but not too hard – acknowledge that today you took another step towards the benefits of the compound effect, and commit to doing the same tomorrow.